DALLAS –
A coalition of seven U.S.-based solar panel manufacturers filed a complaint Wednesday alleging unfair trade practices, setting off an investigation that could thrust the solar industry in the middle of a U.S.-China trade dispute.

For those at SPI in Dallas, there will be a special background briefing about the trade complaint Thursday at 8:30 a.m. in Ballroom C. Speakers include John Smirnow, V.P. Trade and Competitiveness for SEIA and Jeffrey M. Telep, Partner, King & Spalding.

By filing their petition, the companies are claiming that they are unable to compete in the lucrative and quickly expanding American solar market because, they say, they are being undercut by Chinese crystalline silicon panel and cell manufacturers that are dumping their product at artificially low prices. They also contend that panelmakers and cell manufacturers are receiving unfair subsidies from their government. A finding on behalf of the American companies would lead to tariffs being imposed on solar panels imported from China, possibly as soon as next spring.

The American division of SolarWorld, which employs more than 1,000 workers at its Oregon headquarters and manufacturing facility, is the only company named in the trade complaint. The other six remain anonymous, which is allowed by the Department of Commerce. The group on Wednesday launched the Coalition for American Solar Manufacturing.

There was also an growing indication Thursday that German parent company SolarWorld may also be taking steps to file a complaint in Europe.

Trade complaints are not uncommon. However, according to industry sources, the sheer level of inventory and dollars at stake, and the vast potential of a future market, could make this among the most divisive trade complaints filed in recent years.

In response to the news, Rhone Resch president and CEO of the Solar Energy Industries Association (SEIA) said that his organization "will continue to support open markets based on free and fair trade principles." SEIA believes that is is crucial for governments and private organizations, however, to "operate within the framework of internationally-negotiated trade rules.

“If it appears that trade obligations are not being met, solar companies – whether foreign or domestic — have the right to request an investigation into alleged unfair trade practices. These allegations must be thoroughly examined and, if unlawful trade practices are found, action to remedy those practices should be taken," he added.

Politically, some Republican presidential candidates and Congressional lawmakers on both sides of the aisle have indicated support for a more hardline stance against China over issues ranging from manufacturing to perceived currency manipulation. Sen. Ron Wyden, D-Ore., has been among the most vocal critics of the price of solar panels coming into the American market. He recently wrote President Obama a letter saying the administration should impose a heavy tariff on panels coming in from China.

The International Trade Commission has 45 days to issue its preliminary determination, while the Department of Commerce has 180 days for the preliminary determination. At this point, tariffs could be set. The cases generally take 15 months for final determination. While much is conjecture at this point, early indications are that the tariff rate sought by the companies filing the claim are at 100 percent.

A ruling at the higher level could effectively shut out competition from the Chinese market. It also opens up the possibility that China could retaliate against U.S.-based manufacturers that depend on Chinese panelmakers and cell manufacturers, such as the polysilicon industry.

According to a recent report released by SEIA, the U.S. was a net solar exporter to China in 2010, so such a move could strain or potentially jeopardize many of the relationships between American and Chinese companies.

The petition was filed jointly with the Department of Commerce (DOC) and the United States International Trade Commission (ITC). According to sources, it is likely that the DOC and the ITC acted in an advisory role regarding the law and the process prior to the claim being filed. Both organizations now will shift to a fact-finding mode.

The ITC must make its preliminary determination based on three measures of injury:

Whether the imports have a negative impact on domestic producers and production.

Following the ITC determination, the DOC has up to six months to implement preliminary dumping duties. Panels could be sold in the U.S. during that six-month window, but any indication that products were being pushed through to avoid pending tariffs would make many of those transactions subject to penalty.

Chinese panelmakers and/or cell manufacturers could file for an appeal through the World Trade Organization, which could work to find a resolution.

INDUSTRY REACTION

Barry Cinnamon, CEO, Westinghouse Solar

“My opinion is really calibrated on what we in the United States need to do for jobs. The Republicans have a jobs program, Democrats have a jobs program. And we in solar, we should have a jobs program of getting people to work by manufacturing and installing solar. If we can create more jobs installing relatively inexpensive solar panels, and free trade is what supports that, then I think that’s the right thing to do.”

Lisa Frantzis, Navigant Consulting

“The Chinese suppliers have certainly gained a tremendous market share globally. They’ve gone from 3 percent market share in 1997 to 54 percent maker share in 2011. Most of that has been in the last three or four years. The U.S. has gone from about 47 percent to 6 percent in that same time frame. If you look at some of the major module suppliers – Yingli, Trina, Suntech – in Q3, their modules are selling at about $1.30 a watt peak, and we’re hearing prices even lower here today, which will make it very hard for U.S. players to compete in the U.S. market.”

Adam Browning, Vote Solar

“Countries around the world offer incentives in order to attract and build manufacturing sectors. Germany has long offered 50 percent unsecured loans. Malaysia will give you a 10-year tax holiday if you site a manufacturing plant there. In fact, this is what we often ask the U.S. government to do. The key all along has been about reducing costs. China has identified solar as a strategic industry of national importance and the result is they’ve brought down costs tremendously. That is to the benefit of the sector globally. It results in much lower costs in installations and growth in the installation sector. At this point, I’d say a trade war is not of benefit to the American solar industry, the global solar industry and consumers in general.”

Lou Schwartz, Analyst

It certainly shouldn’t be a surprise that U.S. solar panel manufacturers are pursuing anti-dumping and anti-subsidy actions against their Chinese competitors; warnings began circulating in the Chinese renewable energy press months ago that this likely would be one consequence of “cabbage pricing” by Chinese solar exporters. Given the inability of the Chinese to reign in runaway growth in solar capacity development, shrinkage in China’s most significant solar market largely as a result of the European Financial Crisis, growing discontent over high profile bankruptcies, such as Solyndra, amid a prolonged economic stupor in the U.S. and the failure of the Chinese government to more energetically put in place policies directing a greater percentage of this largely export-oriented industry to domestic markets, it all seems rather inevitable.

Though avoidable, “it is what it is”, so we now must address the fallout, which will include more trade friction, an increase in subtle Chinese retaliatory actions, the acceleration of the shake-out in the Chinese solar industry, price increases in the U.S. as a consequence of reduced imports from China, a slowdown in the growth of U.S. solar installations and a delay in achieving the goal of grid parity.

25 Comments

What do you all want?
In case someone in this discussion is talking about cost per watt/peak, he is on the wrong track!
If you want to establish an industry or keep an industry, one has to invest and take some risk. In case one is not prepared to do so, just leave the issue, focus on something else. Hence the discussion is a waist of time.

I can't tell you exactly who's standards, who gave them the authority to set them or why, or how many or few things they apply to (the "Invisible Hand", maybe?); I'm assuming these questions are rhetorical, but I still think it's hard to make a decent go of it living on minimum wage.

Everybody else has an SREC Program...why don't we have one here in New York? Oh, I see you answered that question...it doesn't fly here...Thanks.

I'm not saying people should not feel free to embibe in Domino's Pizza, buy plastic lawn furniture at Walmart, and am sorry that you can't have that junk in your yard.

I'm sure there are some disgruntled, billionaire oil tycoons out there (I had nothing to do with the standards upon which their rate of compensation was set, just so you know), but they're probably disgruntled at the helm of a yacht somewhere, and not making minimum wage, and living under a freeway overpass somewhere else.

I also agree that I would rather have a less powerful PV module than have an auto accident, or have my house blow up.

I'm not sure of the points you're trying to make, in general, but as a disclaimer..."The opinions I state in my posts are my own, and not necessarily those of Thomas Mayrand"

It comes back to 15 million unemployed, disappearance of living wage jobs, abandoned industrial sites and trade deficits unsustainable. The only jobs around seem to be $8 retail, selling imports. Free trade doesn't work.

And hossak is right to emphasize the need for federal energy policy to put effective mechanisms to transition us to renewable energy technologies. Changing the climate and acidifying the oceans are the gravest threat facing our earth, and our children's children's children depend on us getting the switch done asap.

The perfect opportunity for our new MADE IN USA TRADE POLICY to help us rebuild American manufacturing and even full employment at living wages.

"We have high standards here in the US, for what we expect to be compensated"

Well, whose standards are these? And what gives them the authority to set the standards? Do these high standards apply to everything or just a few things? Maybe some people don't mind something a little sub standard. eg. Domino's pizza vs home made pizza. Once again who sets these standards and why? What may fly in one state or country for some reason doesn't fly in others. I can live a few blocks away from a junk yard yet my local gov. tells me I can't have junk in my yard due to zoning restrictions and standards.
And as far as disgruntled workers, they are everywhere working at every pay level. I would rather deal with a PV panel made by a disgruntled employee that may produce slightly less power, yet power just the same, than a highly paid technician having a bad day that may cause an auto accident or my home to blow up.

There are lots of people out there who would rather stand in the unemployment line than work for minimum wage (which is, for the most part, an unliveable amount). As utopian as it must sound to some, I'd like to see all people to be able to prosper at a sustainable level. This is standard assembly work, and I'd rather not have a disgruntled, minimum wage worker assembling my modules. We have high standards here in the US, for what we expect to be compensated, how we expect our industries to behave environmentally, and for the quality and price of the products we buy as consumers. It's good that people like you help to benefit others with philanthropic deeds, but as you say, the selfish (Fossil Fuel corporations, for this example) need to step up to the plate, give up some of the obscene profits, and make sure that fewer people are forced to work for minimum wage. Unfortunately this selfishness will probably not stop unless imposed by "The Government", and it's regulation.

Will, I do a lot of work for free. Working for and volunteering, to help others who otherwise can't afford services needed. We all depend on thousands of people every day of our lives. We all have to open our eyes and realize this.
Next time you wake up, think about the bed your sleeping in. Did you make the mattress and blankets? Did you grow the corn and wheat for your breakfast cereal? Did you make the bowl the cereal is in or mine the metal for your spoon? Who paid the cow for it's milk? Do you drive to work in a car you built from scratch? Did you refine the gasoline needed to make the car go? Are you naked when you get to work or did someone thankfully make the clothes on your back? I could go on and on but hopefully you get the idea. And if you can get it, hopefully others can get it. We all need each other and the services others provide to get by in this world and once we realize that we all have an effect on everybody elses life, then maybe this world will be a better place and selfishness, hopefully followed by greed, will disappear.

Again, a reappropriation of a portion of the subsidies bestowed upon the Fossil Fuel industries to the US Solar industry would go a long way in allowing us to be more competitive. Big Oil alone brings in billions in profit every year. "The Government" needs to step up and make a real committment to the domestic Solar industry, or we're just packing knives to a gunfight. As Will says, our labor and environmental standards will make this an expensive proposition, but a reappropriation of these funds would allow this to come closer to reality without additional US taxpayer burden, as these funds are currently in place, but are (what I consider to be)disproportionately allocated. A combination of tariffs, and a reappropriation of these subsidies to the domestic Solar industry would be a valid solution.

Well Will, with the economy the way it is, and jobs being scarce, I think there would be some people who would be willing to work at minimum wage or so to develop products that could make all of us a little more energy independent. Perhaps companies could offer panels to workers for some added compensation, just like workers at restaurants get a free lunch, to help them reduce their utility bills thus needing less money to live.
As far as labor and environmental standards, I am sure it would be quite easy to find many companies that are in business now who have poor standards. Just think of all the toxic waste produced by other companies and the effect it has on the environment. But those companies cover themselves through the carbon tax and can produce any amount of waste they want, as long as they pay for it. And labor, would you rather see lots of people working to produce RE products or would you rather see them standing in line at the unemployment office?

So now these companies are going to spend who knows how much money fighting chinese imports. Why didn't they, or why don't they use that time and money to make their product cheaper. If the chinese can manufacture things cheaper even with the import tax, there should be some way for these american companies to produce a product at the same or lower price.
Unfortunately, corporate big wigs want the cash. So instead of getting it the right way, developing a product at a decent cost, they opt to go the politcal way and spend all kinds of money to try and make money. I think we all know this just leads to a big waste of time and money and will end up costing them more in the end and they will probably get nothing out of it, except maybe a big tax write off for legal fees and bribes.

Cudos to simpleenegry! When the US adopts trade policies that destroys economic sectors of other countries it is fine and dandy. When the wheel turns it hurts like hell - get a grip on reality and come back in support of the 'organization (that)will continue to support open markets based on free and fair trade principles.' by being really free and fair and not the pretence of it for corporate gains.

Alternate energy is where it is today because we do not have an honest market. Pass the real cost of energy per watt to the customer and see what happens: "Those buggers are buying from the other guys again again because they offer a lower total cost to customer deal!"

Spare us the emotion and blind 'was not invented here' sentiment. Give us our democratic right: to buy globally at best real value...while the rest decide how they can get those uppity consumers back under manipulated price control for better profit margins.

We have very little time left for this type of trade tactics to keep a captive customer base. Failure to match the opposition leads to business irrellavance and will in the long run destroy an economy regardless of how many Job Programs or Bailouts. The world's energy realities will remove our blinkers if economic common sense and really free global trade will not.

Yes, China does follow dubious manufacturing and labour policies but let's resolve that as labour and human rights issues and not use that to confuse the real issue - we do not have an honest and transparent energy market.

News regarding this "Coalition" showed up on the front page of the New York Times this morning, and produced a landslide of comments. At least one very good thing will come of this, as it is raising the American public's awareness about valid issues that surround our industry; it's not often I see much about "Renewable Energy World.com" outside of the website, although this site is an excellent resource for those of us who appreciate it. Obviously there are many well made Chinese modules, but many customers that have benefitted from the "low" cost of third tier modules probably had no idea about their Country of origin, or their quality; I'm sure the installers didn't advertise "Cheap, Because They're Made in China!", and most try to keep that info well under the cuff. There are many sides to this story; reappropriation of some of the subsidies to the Fossil Fuel industries to domestic Solar companies could help us become more competitive without additional burden to taxpayers. Yes, I think "The Government" should be doing more to help domestic industry, or even using those reappropriated subsidies to directly support Residential Solar installations. You can call me a whiner, but SolarWorld has certainly will have done it's part to open up dialog regarding a pertinent issue, and we'll see what shakes out. Fair Trade, can only be a better solution.

ANONYMOUS
October 20, 2011

This is coming after the recent lay-off of several hundred of SolarWorld's employees. Possible grasp to redefine position in the marketplace?

ANONYMOUS
October 20, 2011

Interesting: "SolarWorld, however, said Oregon's $40 million in tax credits, its trained work force and environmentally friendly policies helped it choose the state". More recently "The site is currently under reconstruction, with an investment of over $400 million. The State of Oregon has pledged to support these investments with property and business energy tax credits". Ignore that man behind the curtain.

Maybe the US should look at some of the supply chain issues that make it more difficult to compete; for instance, why is made-in-America solar glass and aluminum more expensive than the same thing made elsewhere - especially when the dominant cost input to these commodities is energy? One reason Chinese module manufacturers can be cheaper is that their material costs are lower. Also, their supply chain pushes the envelope: for example, there was no economic advantage to using AR coated glass until Chinese manufacturers developed the capability to add AR coating at a sufficiently low cost.

The response should be, "Thank you, China, for helping make solar more affordable." But it appears U.S. solar manufactures are more interested in protecting their own interest than the environment which will definitely fuel the anti-AGW crowd. Grab some popcorn and watch the whining show... looks like it's just heating up.

This is envy politics pure and simple. The market is no place for whiners, and to try to get the 'government' to level the playing field because of their own own inefficiencies is simply immoral.

This would subsidize companies that cannot keep up in the market (even if they are 'American') and punish those companies ruthlessly driving down prices to survive.

'Dumping' is BS. These inexpensive panels are subsidizing every solar installation in America. The consumers are getting a subsidy FROM china for solar. Why punish China?

Anyone in the solar manufacturing industry better wear their thickest skin because the 'market' is tough. Don't try to get advantages for yourself by penalizing your competitors (30% for instance).

How about enjoying the inexpensive panels that china is able to produce? How about ruthlessly cutting excess so that you can compete?

Or maybe you can take the easy path and simply get the politicians to help you out.

Shame on SolarWorld and the 6 unnamed co-authors of this abomination.

We all wanted the price of solar to drop.... It is.... So we ask our leaders to help us because we can't keep up.

Grow up.

If you think 'made in America' is so important to the 'american public' then put it in big letters on your advertisements and charge more. The customers will vote with their dollars. Then you will know if the 'American public' wants stuff made here or stuff made anywhere.... at a good price and of good quality.

So-called 'free trade' policies are ruining our country by exporting our manufacturing jobs and expertise and future prosperity. Competing against poverty wages and environmentally destructive mfg methods is not just morally wrong, its also undermining America's future.

Renewable energy technologies are much too essential to America's economic and (earth's environmental) survival in the 21st century --too important to be sacrificed to ruinous 'free trade' policies. That's why solar is a nice sharp edge of the wedge needed to open a re-examination of our entire trade policy. Because its not just solar and its not just China.

Look at our cities full of empty rusting industrial brown fields, our tens of millions unemployed, our stores flooded with cheap imported crap and our trade deficits unsustainable. Look at the disappearance of living wage jobs and their replacement by $8 retail clerks selling us Made In China throwaway products. That is 'free trade,' and cheap imports are definitely not cheap to our society.

Its time to replace so-called 'free trade' with a MADE IN USA TRADE POLICY. Start with a flat tariff on all imported goods and services, with the only question being the rate (how about 30%). Then add a tax reform that rewards companies for increasing the number of living-wage jobs on US soil and punishes companies that decrease such jobs by moving operations outside our borders.

The article above warns that US trade sanctions 'opens up the possibility that China could retaliate against U.S.-based manufacturers that depend on Chinese panelmakers and cell manufacturers, such as the polysilicon industry.' I say "No problem we can use all that silica right here in USA as we replace fossil fuels and nukes with 100% MADE IN USA renewable energy technologies.'

If only our political system would respond to the needs of our people and nation's future instead of the 1% who are taking all the 'gains' of globalization and 'efficiency.'

I'm baffled. If China is indeed 'dumping their product at artificially low prices' then the balance of the solar industry, the distributors, installers, and finally customers should be benefiting from the artificially low-priced cells. In fact, the savings created (albeit artificial) should be so great that throngs of deal-hunting customers should be pounding on the doors of solar installers demanding their cheap solar cells. Why don't I see such demand?

One look at PV prices in the last 10 years shows that in general they have been trending downward almost linearly. The one exception was during a period from mid-2004 through 2008 when artificial demand (which could be attributed to the build up of the real estate bubble) caused PV prices to deflect upward. Post real estate bubble burst, the prices have trended back downward to their expected linear path. [Source: http://solarbuzz.com/facts-and-figures/retail-price-environment/module-prices]

I suspect what we are seeing is whining because US solar manufacturers made the poor business decision to ramp up production capacity to meet demands during the peak of the real estate bubble. Now, with demand falling they want to recoup their losses through Government intervention.

Hoping to capitalize on (and possible offset the bad publicity caused by) the collapse of Solyndra, they want to blame the Chinese.

What ever happened to the Westinghouse roof mounted "plug & play" solar rooftop unit? This unit promised very simple installation and a favorable cost. Installing these units on millions of consumer rooftops was to be a quick & easy labor undertaking. Why didn't they strike an agreement with one of the locally supplied electric cars for sun powered battery charging?